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August 2017

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The prospects have improved for global economy, but the road to recovery in the advanced economies will remain bumpy, the International Monetary Fund (IMF) has said in its latest report ‘World Economic Outlook April 2013: Hopes, Realities, Risks’.

The report forecasts the world output growth to reach 3¼ percent in 2013 and 4 percent in 2014.

“In advanced economies, activity is expected to gradually accelerate, starting in the second half of 2013,” states the report. Private demand appears increasingly robust in the United States, but it is still very sluggish in the euro area, the report adds.

The report says advanced economy policymakers have successfully defused two of the biggest short-term threats to the global recovery – the threat of a euro area breakup and a sharp fiscal contraction in the United States caused by a plunge off the ‘fiscal cliff’ – over the past six months.

In 2013, after a weak first half, IMF projects the real GDP growth in the advanced economies to rise above 2 percent for the rest of the year and to average 2¼ percent in 2014, spurred by U.S. growth of about 3 percent.

According to the report, activity has already picked up steam in emerging market and developing economies. It says, “There was a noticeable slowdown in the emerging market and developing economies during 2012, a reflection of the sharp deceleration in demand from key advanced economies, domestic policy tightening, and the end of investment booms in some of the major emerging market economies."

"But with consumer demand resilient, macroeconomic policy on hold, and exports reviving, most economies in Asia and sub-Saharan Africa and many economies in Latin America and the Commonwealth of Independent States are now seeing higher growth,” it adds.

It predicts the recovery in emerging Europe to gain speed as demand from advanced Europe slowly picks up. However, it forecasts economies in the Middle East and North Africa will continue to struggle with difficult internal transitions. In addition, it points out that a couple of economies in South America are facing high inflation and increasing exchange market pressure.